Gold exchange-traded funds

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Overview:

Gold exchange-traded funds (ETFs) attracted Rs 1,028 crore in August, making it the highest inflow in 16 months.

About Gold exchange-traded funds:

  • These are commodity-based exchange-traded funds with an underlying asset as gold.
  • These are passive investment instruments that are based on gold prices and invest in gold bullion.
  • Gold ETFs are units representing physical gold which may be in paper or dematerialised form.
  • One unit of this fund is equal to 1 gram of gold and is backed by physical gold of very high purity.
  • They are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd. (BSE).
  • There is a complete transparency on the holdings of a Gold ETF due to its direct gold pricing.

 

What is an Exchange Traded Fund (ETF)?

  • It is a collection of investments such as equities or bonds.
  • It is a basket of securities that trades on an exchange just like a stock does.
  • It can contain all types of investments, including stocks, commodities, or bonds.
  • They have cheaper fees than other types of funds. 
  • These funds have much lower expenses as compared to physical gold investments.

 


Q1) What is National Stock Exchange Limited (NSE)?

The National Stock Exchange of India Limited (NSE) is one of the leading stock exchanges in India. It was established in 1992 and is headquartered in Mumbai, Maharashtra. NSE is known for its electronic trading platform, which has revolutionized the way securities are traded in India.

Source: Inflows in Gold ETF hit a 16-month high at Rs 1,028 crore in August